Charles Hurwitz died for our sins

Once, thrift and debt-free profits were sound business. A firm handshake or a man's word sealed the deal. In the 1980s all that changed. There were piles of money to be made. The landscape became littered with leveraged debt and junk bonds. Free enterprise morphed into greed gone wild. During that period Texas-based financier and Maxxam CEO Charles Hurwitz devised a takeover of a sluggish Pacific Lumber Company (PALCO) and gave the North Coast a working over the likes of which it had never seen.

At the time, PALCO was an economically sound timber company. The business had large assets and no debt, and followed fairly conservative harvesting techniques. But according to Tom Herman, a forest manager for the company through the 1990s, the motivation was profit. Logging regulations were not anywhere near as strict (and consequently far worse on the environment) before Hurwitz arrived on the scene. The company was there to grow and harvest trees, not build parks.

PALCO's problem was mismanagement -- its assets became its weakness. The employee pension account was overfunded and the company held tremendous resources in old-growth redwoods. It was ripe for a buyout. The board was caught entirely by surprise (although there were rumors of collusion). By the time then-President Gene Elam noticed stock prices rising, the damage was done. Hurwitz snatched up the $2 billion company for a bargain basement price of $900 million.

The PALCO takeover was heavily leveraged. To pay back the accumulated debt (financed largely with junk bonds by Michael Milken), Hurwitz accelerated logging on the company's nearly 200,000 acres of timber. He began overcutting and immediately became ensnared in environmental controversy.

Since then, the Texas financier has been labeled a crook and blamed for everything from the vanishing way of life for timber workers to the vanishing remnants of an old-growth redwood ecosystem. Is Hurwitz the loathsome lizard he's been made out to be? That depends on whether or not you believe in a system of government that allows for the individual ownership of property and the right to make your own decisions in the purchase of goods and the selling of products. If not, you're probably living in the wrong country.

Hurwitz is a businessman pure and simple, a money-motivated capitalist like Warren Buffet and T. Boone Pickens. He bought PALCO because it was priced low and the cost of borrowing money for the purchase price would be offset by undervalued property's true worth. It was simple mathematics, not old-growth forest preservation. The buyout was done for profit, not to save "The People's Land." Like it or not, that's how business is conducted here in America.

Those who know Hurwitz on a personal level respect the man. Margret Campbell, wife of late PALCO president John Campbell, is one of those people.

"Charles was a southern gentleman," said Margret. "His humanitarianism was top notch." When the Campbell home was under attack from angry environmentalists, it was Hurwitz who came to their rescue. "He had a 24-hour camera and a surveillance system installed on the premises. He also bought the family a guard dog."

According to Margret, Hurwitz is also frugal. Despite his incredible wealth, he has no need for ego-based extravagances. He and his family have lived for many years in the same house and neighborhood where they raised their sons. "Charles lived in a condo with his wife and two boys," she said. "He was competitively, not monetarily, motivated."

Some call Hurwitz a hero. Stockholders loved him. When he took control of PALCO, not one employee was fired. This was in an area of high unemployment. Hurwitz also continued a Pacific Lumber practice of giving a college scholarship to every employee's child who finished high school. According to John Campbell, people came down way too hard on Hurwitz, particularly regarding the logging of old-growth redwood.

"It was all going to be cut anyway," Campbell stated in an interview. "PL was simply asserting its legal right as a private property owner to use its property economically. Our position has always been that if the federal and state government wanted to preserve Headwaters that was fine with us."

Charles Hurwitz did not single-handedly destroy PALCO. Much of the blame falls squarely on the shoulders of ex-President Gene Elam and the board of directors for listing the company on the New York Stock Exchange, having no "friendly" shareholders to step in, and for failing to anticipate the threat of a stock raid.

In retrospect, Charles Hurwitz considers the leveraged buyout of Pacific Lumber a mistake. "This (PALCO) is the root of all evil for us," he said in an interview with Texas Monthly Magazine. "Everything that's bad in my business life has come out of this."

Tim Martin resides in Fortuna and writes this column for the Times-Standard.